Former Southold resident gets 42 months for bribery scheme

FILE PHOTO COURTESY OF SILVERWOOD FILMS | The cast and producers of ‘Phoebe in Wonderland’ gathered at a premiere party at the Sundance Film Festival in Utah in 2008. Left to right: Bill Pullman, Felicity Huffman, Doug Dey and Lynette Howell of Silverwood Films, Elle Fanning, co-producer Ben Barnz, Patricia Clarkson, and writer/director Daniel Barnz. 1/30/2008

Douglas Dey, a former Southold resident and Calverton businessman, was sentenced to 42 months in jail Wednesday for his part in a $25 million bribery scheme, according to federal officials.

Mr. Dey, who had a manufacturing business at the Enterprise Park at Calverton called South Bay Apparel, was convicted for offering bribes in a multi-million dollar “kickback scheme” with a clothing company executive in the 1990s and 2000s.

Mr. Dey was ordered to forfeit $7.5 million in assets to the government and to pay $13.6 million in restitution to Aeropostale, which makes tee shirts and fleece products aimed at teenagers.

South Bay is no longer in business.

Mr. Dey also was a producer of a number of Hollywood movies, including “Blue Valentine,” with Michelle Williams, who was nominated for an Oscar for her role in the film, and “Phoebe in Wonderland,” starring Elle Fanning, parts of which were filmed in the Roanoke Avenue Elementary School.

Mr. Dey had pleaded guilty in September of 2012 to conspiracy to violate the Travel Act through commercial bribery, for paying more than $25 million in kickbacks to Christopher Finazzo, Aéropostale’s former Executive Vice President and Chief Merchandising Officer, in order to obtain more than $350 million in business from Aeropostale, according to the Federal Bureau of Investigation.

Mr. Finazzo had been convicted on all 16 counts of fraud and commercial bribery he faced for his role in the scheme following a three-week jury trial in April 2013, and is scheduled to be sentenced on August 20, 2014, officials said.

“For over a decade, Dey used bribes and kickbacks to gain an unfair and illegal advantage for his t-shirt and fleece business,” U.S. Attorney Loretta Lynch said in a printed statement. “By doing so, he fleeced Aéropostale and its investors out of tens of millions of dollars and damaged the financial well-being of a publicly-traded retail company.”

Federal prosecutors said that shortly after Mr. Finazzo was hired by Aéropostale in July 1996, he and Mr. Dey “entered into a fraudulent scheme” whereby Finazzo directed Aéropostale’s graphic t-shirt business to South Bay Apparel.

This came in exchange for splitting South Bay’s profits with Mr. Dey, prosecutors said.

From 1996 to 2006, Mr. Finazzo caused Aéropostale to buy more than $350 million in t-shirt and fleece merchandise from South Bay, often for significantly higher prices and lower quality than was available from other suppliers, prosecutors said.

In exchange, Mr. Dey paid Mr. Finazzo more than $25 million in bribes and kickbacks, equaling approximately 50% of South Bay’s profits, according to the FBI.

“In 2005 alone, at the peak of the business between Aéropostale and South Bay, Mr. Dey paid Mr. Finazzo more than $13 million in kickbacks,” the FBI said.